Taking on Africa risk

Sarah Rundell gets to grips with the development of trade credit and political risk insurance in Sub-Saharan Africa.

Whether as protection against late payment, terrorism, war or looming political uncertainties such as the up-and-coming elections in the Ivory Coast, Burkina Faso, Guinea and Tanzania, insurance increasingly oils the wheels of African trade.

The bulk of trade insurance in the region covers commodity shipments coming out of Africa, and infrastructure, including telecoms and power equipment, going in to the continent. Although the latest predictions from economists at the World Trade Organisation see global trade growing at just 3.3% this year, Africa’s economic growth prospects of 4.4% in 2015 and 4.7% in 2016 suggest steady trade flows. Economists predict stronger African domestic demand based on private consumption and public investment in infrastructure as well as increasing foreign direct investment. “The sectors which will remain buoyant in the coming months are still construction, agriculture, services and, to a lesser extent, the manufacturing industry,” predicts Jean-Christophe Batlle, Africa manager at Coface, in the French ECA’s latest research note.

One growing area of demand is from African banks expanding their intra-African trade finance operations to meet demand from key clients. The UN puts intra-African trade at around 12% of Africa’s total trade – although it could well be more because of high levels of informal trade and Africa’s porous borders. “We are doing a lot of work with banks to provide financing solutions and mitigate risk for SMEs,” says Benjamin Mugisha, an underwriter at the African Trade Insurance Agency (ATI). “We have supported South African banks lending into Africa and are now doing more business with Nigerian banks wanting to do cross-border transactions too,” says Roderick Barnett, an underwriter at specialist insurer Beazley.

Demand for insurance is also coming from Africa’s biggest banks wanting to boost capital adequacy in line with Basel requirements. Insurance provision isn’t always linked to capital relief, and many African banks are behind the curve on meeting the Basel regulatory framework anyway, yet insurance is helping some banks lend more, as illustrated in a novel initiative in the DRC, explains the ATI’s Mugisha. Africa’s central banks require that their local banks set aside an equivalent of 12% of capital to cushion lending. But in the DRC, where the regulatory capital to risk weighted assets is currently 24.5%, banks in receipt of ATI’s insurance cover will only be required to set aside 12.25% worth of capital reserve if the transaction meets all eligibility criteria, he explains. “It’s a capital relief that will help local banks lend at the same levels as their better capitalised counterparts.”

In another trend, demand is also coming from corporates seeking political risk insurance to protect themselves against sudden political change. For many of Africa’s biggest indigenous corporations, either mining groups, service providers or construction companies, local governments are their most significant client. “There is a growing need for mitigation to protect traders or businesses from delays in payment particularly,” says Mugisha.

“In Sub-Saharan Africa those businesses that are large, sizeable contributors to GDP are now very aware that their relationship with the government might change down the line in contrast to the past, when they felt that their relationship with the government wasn’t a particular concern,” says Cape Town-based Ebbe Rabie, senior account executive at JLT. Elizabeth Stephens at Veritas sounds a similar warning bell. “Ageing leaders present a concern. Stability in Uganda is inextricably bound up in the person of President Museveni. The lack of succession planning could be a source of instability should he leave office unexpectedly. Similar scenarios are possible in Rwanda and the DRC.”

An upswing in demand and supply
Industry experts predict demand for more innovative insurance will increasingly flow from new industries such as Africa’s renewable sector, or Nigeria’s emerging power sector. De-risking of cashflows from renewable energy projects, for example through covering the shortfall in power production in case of lack of wind or sun, can make projects bankable. “Insurance like this is tricky to underwrite because we have to ensure any contract of the sale of power to a government would stand up to a change in government, however we are interested in supporting these kinds of flows,” says Beazley’s Barnett.

Innovative policies are also working to draw more private insurers into the sector. For example, the African Risk Capacity, ARC, founded in 2012 by the African Union, aims to help member states better plan, prepare and respond to extreme weather events and natural disasters by using insurance against the risk of drought, with the intention of rolling it out to cover other disaster like Ebola. ARC Ltd paid out US$26.3mn in its first policy year after three of the participating countries in western Africa suffered low rainfall. It’s an initiative that aims to provide assistance immediately, rather than wait for aid to arrive, and build capacity in the private sector to ultimately offer these products itself. By bringing together the concepts of insurance and contingency planning, ARC’s aim is to create a new way of managing weather risk by transferring part of the burden away from African governments to international financial markets much better equipped to handle the risk.

Capacity, like demand, has also increased. Industry experts report more appetite for African risk with new underwriters prepared “to take on Africa” for the first time. ATI, for example, is now approached by the London market looking to insure African risk and has grown capacity to carry out spot transactions in different countries.

Insurers also notice an increase in the spread of risk across the continent. Support for Zimbabwe is slowly turning around, and neither Mozambique nor Zambia are seen as “high risk” anymore, explains JLT’s Rabie. “Underwriters are putting their pen down to these types of territories: investment is going in.”

Christian Hendriks, deputy CEO at specialist political risk and credit insurer Garant adds: “There is more capacity in the market because there are more syndicates willing to look at Africa.” However he qualifies that at the riskier end of the scale, although many insurers “go to the end of the transaction” most are reluctant “to go to the very end.”

For Africa’s seasoned operators like Hendriks, today’s risks are “nothing out of the ordinary”. Instability in northern Nigeria is the biggest concern but the company hasn’t experienced any losses through terrorist activities in that region yet. “The Boko Haram presence around oil and commodities is a big issue spreading through northern Nigeria, Mali and the Ivory Coast, creating real tensions in the commodity sector. We are having to look much more closely at the exact location of the goods,” he says. Anecdotal reports highlight losses for insurers in Ghana’s steel sector, where the slowdown in the construction industry has caused insolvencies and non-payment. It’s a warning echoed by Coface’s Batlle who cautions that the fall in commodity prices has stalled investment programmes, meaning payments could be frozen or delayed and providers of services and materials may find themselves faced with payment delays.

Factors obstructing growth
Despite the upswing in capacity, significant barriers continue to hinder the growth of Africa’s insurance sector, mostly around complex licensing with country-specific legal peculiarities. It’s left many of the biggest private players frustratingly confined to the South African market. “Harmonising policy for a pan-African insurance stronghold is an increasing challenge. Most African states have yet not legislated on the matter. It’s a grey area,” says Duarte Pedreira, manager, international trade credit at AIG.

Beazley’s Barnett adds: “Due diligence is challenging. Almost all our insureds are located outside Africa because of the licensing that would be required. We rely very much on the insured’s own due diligence and we’d never underwrite an African corporate with no audited financials.”

It’s a moot point. Audited financials aren’t always available and don’t always give an accurate picture of a company’s financial health anyway. It means groups like AIG have to go the extra mile in their due diligence, explains Pedreira. “The kinds of questions you have to ask an African industrial corporate are completely different to the types of questions you ask in developed markets. Do you have access to power and how much do you spend on electricity? Are the roads to port paved? Are there still landmines left over from the war? These are the kinds of things we need to know.” He warns against “suitcase underwriters” in reference to insurers who fly into a region, broker a deal and flying out the same day. Other challenges include judicial weakness in African markets making it difficult to seize recoverables in case of a default. “Write-offs become likely,” he says.

Because local knowledge is crucial in assessing risks, local insurers could have a real advantage. But policy and regulatory hurdles aside, Africa’s own insurance sector is still hampered by a lack of expertise and experience. A growing trend of bogus insurers, particularly targeting Africa’s SME sector, is also damaging the industry. “There is quite a bit of misrepresentation out there. SMEs need to be really cautious of who their intermediary and who their insurer actually is. If they venture off the path and go to unnamed parties they could fall foul of entities that have seen a gap in the market,” says JLT’s Rabie.

And even for some of the most resilient insurers, some African risk remains off the table. “We get lots of enquiries from Sudan and Libya but we really struggle to help them,” says Rabie. Beazley too would find it “very difficult” to support any investment in Libya. The ATI’s Mugisha concludes: “We can’t insure a burning house. We have to take a view that there is an insurable solution.”

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Privacy Policy

Our privacy commitments

This Privacy Policy outlines the information we may collect about you in relation to your use of our websites, events, related publications and services (“personal data”) and how we may use that personal data. It also outlines the methods by which we and our service providers may (subject to necessary consents) monitor your online behaviour to deliver customised advertisements, marketing materials and other tailored services. This Privacy Policy also tells you how you can verify the accuracy of your personal data and how you can request that we delete or update it.

This Privacy Policy applies to all websites operated by Exporta Publishing & Events Ltd (as indicated on the relevant website).

This privacy statement does not cover the activities of third parties, and you should consult those third-party sites’ privacy policies for information on how your data is used by them.

Any questions regarding this Policy and our privacy practices should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

Who are we?

Established in 2002 and with offices in London and Singapore, Exporta Publishing & Events Ltd is the world’s leading trade and trade finance media company, offering information, news, events and services for companies and individuals involved in global trade.

Our principal business activities are:

Business-to-Business financial publishing. We provide a range of products and services focused on international commodities, export, supply chain and trade finance markets including magazines, newsletters, electronic information and data

Organisers of seminars, conferences, training courses and exhibitions for the finance industry

Exporta Publishing & Events Ltd is a company registered in the United Kingdom with company number 4407327 | VAT Registration: 799 1585 59

Data Protection Policy

This Data Protection Policy explains when and why we collect personal information about people who visit our website, how we use it, the conditions under which we may disclose it to others and how we keep it secure.

Why do we collect information from you?

Our primary goal in collecting personal data from you is to give you an enjoyable customised experience whilst allowing us to provide services and features that will meet your needs.
We collect certain personal data from you, which you give to us when using our Site and/or registering or subscribing for our products and services. However, we also give you the option to access our Sites’ home pages without subscribing or registering or disclosing your personal data.

We also collect certain personal data from other group companies to whom you have given information through their websites (including, by way of example, Exporta Publishing & Events Ltd and subsidiaries, in accordance with the purposes listed below). Should we discover that any such personal data has been delivered to any of the Sites, we will remove that information as soon as possible.

Why this policy exists

This Data Protection Policy ensures Exporta Publishing & Events Ltd:

Complies with data protection law and follow good practice

Protects the rights of staff, customers and partners

Is open about how it stores and processes individuals’ data

pretexts itself from the risk of a data breach

We may change this Policy from time to time so please check this page occasionally to ensure that you’re happy with any changes. By using our website, you’re agreeing to be bound by this Policy.

Data protection law

The Data Protection Act 1998 described how organisations – including Exporta Publishing & Events Ltd – must collect, handle and store personal information. These rules apply regardless of whether data is stored electronically, on paper or on other materials. To comply with the law, personal information collected must be stored safely, not disclosed unlawfully and used fairly.

The Data Protection Act is underpinned by eight important principles. These say that personal data must:

Be processed fairly and lawfully

Be obtained only for specific, lawful purposes

Be adequate, relevant and not excessive

Be accurate and kept up to date

Not be held for any longer than necessary

Processed in accordance with the rights of data subjects

Be protected in appropriate ways

Not be transferred outside the European Economic Area (EEA), unless that country of territory also ensures an adequate level of protection

How do we collect information from you?

We obtain information about you when you use our website, for example, when you contact us about products and services, when you register for an event, register to receive eNewsletters, subscribe or register for a trial to our GTR magazine/website.

Types of Personal Data Held and its Use

1. Customer Services and Administration

On some Sites, Exporta Publishing & Events Ltd collects personal data such as your name, job title, department, company, e-mail, phone, work and/or home address, in order to register you for access to certain content, subscriptions and events. In addition, we may also store information including IP address and page analytics, including information regarding what pages are accessed, by whom and when.

This information is used to administer and deliver to you the products and/or services you have requested, to operate our Sites efficiently and improve our service to you, and to retain records of our business transactions and communications. By using the Sites and submitting personal information through the registration process you are agreeing that we may collect, hold, process and use your information (including personal information) for the purpose of providing you with the Site services and developing our business, which shall include (without limitation) the purposes described in the below paragraphs.

2. Monitoring use of our Sites

Where, as part of our Site services, we enable you to post information or materials on our Site, we may access and monitor any information which you upload or input, including in any password-protected sections. Subject to any necessary consents, we also monitor and/or record the different Sites you visit and actions taken on those Sites, e.g. content viewed or searched for. If you are a registered user (e.g. a subscriber or taking a trial), when you log on, this places a cookie on your machine. This enables your access to content and services that

are not publicly available. Once you are logged on, the actions you take – for example, viewing an article – will be recorded (subject to any necessary consents). We may use technology or a service provider to do this for us. This information may be used for one or more of the following purposes:

to fulfil our obligations to you;

to improve the efficiency, quality and design of our Sites and services;

to see which articles, features and services are most read and used

to track compliance with our terms and conditions of use, e.g. to ensure that you are acting within the scope of your user licence;

for advertising purposes, although the information used for these purposes does not identify you personally. Please see paragraph 5 below for more details;

to protect or comply with our legal rights and obligations; and

to enable our journalists to contact and interact with you online in connection with any content you may post to our Sites.

Please see paragraph 5 below for more information on cookies and similar technologies and a link to a page where you can turn them on or off.

3. Marketing

Some of your personal data collected under paragraphs 1 and 2 above may be used by us to contact you by e-mail, telephone and/or post for sending information or promotional material on our products and/or services and/or those of our other group companies. We give you the opportunity to opt-out of receiving marketing communications. Further detail can be found on the applicable Site and in the footer of each marketing communication sent by us, our group companies or service providers. See also “Consents and opt-outs” section below. We will not share your information with third parties for marketing purposes.

4. Profiling

We may analyse your personal information to create a profile of your interests and preferences so that we can contact you with information relevant to you.

5. Cookies and similar technologies

All our Sites use cookies and similar technical tools to collect information about your access to the Site and the services we provide.

What is a cookie?

When you enter some sites, your computer will be issued with a cookie. Cookies are text files that identify your computer to servers. Cookies in themselves do not identify the individual user, just the computer used.

Many sites do this whenever a user visits their site in order to track traffic flows, recording those areas of the site that have been visited by the computer in question, and for how long.

Users have the opportunity to set their computers to accept all cookies, to notify them when a cookie is issued, or not to receive cookies at any time. Selecting not to receive means that certain personalised services Exporta Publishing & Events Ltd offers cannot then be provided to that user.

Why do we use cookies?

Log In – Where we provide log in mechanisms for site users a cookie is created at login and for the duration of the session. Each cookie contains a unique reference number only (no personal information) which is used to confirm you are authorised.

Analytics – To allow us to keep track of traffic to our website we use cookies. The cookies simply tell us if you have previously visited our website so we can get more accurate figures for New vs Returning visitors.

We may use cookies to:

remember that you have used the Site before; this means we can identify the number of unique visitors we receive to different parts of the Site. This allows us to make sure we have enough capacity for the number of users that we get and make sure that the Site runs fast enough

remember your login session so you can move from one page to another within the Site;

store your preferences or your user name and password so that you do not need to input these details every time you visit the Site;

customise elements of the layout and/or content of the pages of Site for you;

record activity on our Sites so that we understand how you use our Sites enabling us to better tailor our content, services and marketing to your needs;

collect statistical information about how you use the Site so that we can improve the Site; and

gather information about the pages on the Site that you visit, and other information about other websites that you visit, so as to place you in a “market segment”. This information is only collected by reference to the IP address that you are using, but does include information about the county and city you are in, together with the name of your internet service provider.

Most web browsers automatically accept cookies but, if you prefer, you can change your browser to prevent that, or to notify you each time a cookie is set. You can also learn more about cookies in general by visiting www.allaboutcookies.org which includes additional useful information on cookies and how to block cookies using different types of browser. Please note however, that by blocking, deleting or turning off cookies used on the Site you may not be able to take full advantage of the Site.

6. E-mail tracking

E-mail tracking is a method for monitoring the e-mail delivery to those subscribers who have opted-in to receive marketing e-mails from GTR, including GTR Africa, GTR Asia, GTR Americas, GTR Europe, GTR Mena, GTR eNews, Third party e-mails and GTR Ventures.

Why do we track e-mails?

So that we can better understand our users’ needs, we track responses, subscription behaviour and engagement to our e-mails – for example, to see which links are the most popular in newsletters. They enable us to understand the consumers journey through metrics including open rate, click-through rate, bounces and unsubscribes. Any other purposes for which Exporta Publishing & Events Ltd wishes to use your personal data will be notified to you and your personal data will not be used for any such purpose without obtaining your prior consent.

How do you track GTR eNewsletters?

To do this, we use pixel GIFs, also known as “pixel tags” – these are small image files that are placed within the body of our e-mail messages. When that image is downloaded from our web servers, the e-mail is recorded as being opened. By using some form of digitally time-stamped record to reveal the exact time and date that an e-mail was received or opened, as well the IP address of the recipient.

7. Consents and opt-outs

You can give your consent to opt-out of all or any particular uses of your data as indicated above by:

Indicating at the point on the relevant Site where personal data is collected

Informing us by e-mail, post or phone

Updating your preferences on the applicable Site or eNewsletter (unsubscribe and preference options are available in the footer of each eNewsletter)

To turn cookies and similar technologies on and off, see the information in paragraph 5 above.
Any questions regarding consents and opt-outs should be sent by e-mail to privacy@gtreview.com or by writing to Data Protection Officer at, Exporta Publishing & Events Ltd, 4 Hillgate Place, London, SW12 9ER, United Kingdom. Alternatively, you can telephone our London headquarters at +44 (0) 20 8673 9666.

8. Disclosures

Information collected at one Site may be shared between Exporta Publishing & Events Ltd and other group companies for the purposes listed above.

We may transfer, sell or assign any of the information described in this policy to third parties as a result of a sale, merger, consolidation, change of control, transfer of assets or reorganisation of our business.

9. Public forums, message boards and blogs

Some of our Sites may have a message board, blogs or other facilities for user generated content available and users can participate in these facilities. Any information that is disclosed in these areas becomes public information and you should always be careful when deciding to disclose your personal information.

10. Data outside the EEA

Services on the Internet are accessible globally so collection and transmission of personal data is not always limited to one country. Exporta Publishing & Events Ltd may transfer your personal data, for the above-listed purposes to other third parties, which may be located outside the European Economic Area and/or with a different level of personal data protection. However, when conducting transfers, we take all necessary steps to ensure that your data is treated reasonably, securely and in accordance with this Privacy Statement.

Who has access to your information?

Confidentiality and Security of Your Personal Data

We are committed to keeping the data you provide us secure and will take reasonable precautions to protect your personal data from loss, misuse or alteration.

However, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our Site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features described above to try to prevent unauthorised access.

We have implemented information security policies, rules and technical measures to protect the personal data that we have under our control from:

unauthorised access

improper use or disclosure

unauthorised modification

unlawful destruction or accidental loss

All our employees, contractors and data processors (i.e. those who process your personal data on our behalf, for the purposes listed above), who have access to, and are associated with the processing of your personal data, are obliged to keep the information confidential and not use it for any other purpose than to carry out the services they are performing for us.

Responsibilities

Everyone who works for or with Exporta Publishing & Events Ltd has some responsibility for ensuring data is collected, stored and handled appropriately. Each team handling personal data must ensure that it is handled and processed in line with this policy and data protection principles. However, the following people have key areas of responsibility.
The board of directors is ultimately responsible for ensuring that Exporta Publishing & Events Ltd meets its legal obligations.

Name of Data Controller

The Data Controller is Exporta Publishing & Events Ltd. Exporta Publishing & Events Ltd is subject to the UK Data Protection Act 1998 and is registered in the UK with the Information Commissioner`s Office.

How to access, update and erase your personal information

If you wish to know whether we are keeping personal data about you, or if you have an enquiry about our privacy policy or your personal data held by us, in relation to any of the Sites, you can contact the Data Protection Officer via:

Upon request, we will provide you with a readable copy of the personal data which we keep about you. We may require proof of your identity and may charge a small fee (not exceeding the statutory maximum fee that can be charged) to cover administration and postage.

Exporta Publishing & Events Ltd allows you to challenge the data that we hold about you and, where appropriate in accordance with applicable laws, you may have your personal information:

erased

rectified or amended

completed

Disclosing data for other reasons

In certain circumstances, the Data Protection Act allows personal data to be disclosed to law enforcement agencies without the consent of the data subject. Under these circumstances, Exporta Publishing & Events Ltd, will disclose requested data. However, the Data Controller will ensure the request is legitimate, seeking assistance from the board and from the company’s legal advisors where necessary.

Changes to this Privacy Statement

We will occasionally update this Privacy Statement to reflect new legislation or industry practice, group company changes and customer feedback. We encourage you to review this Privacy Statement periodically to be informed of how we are protecting your personal data.

Providing information

Exporta Publishing & Events Ltd aims to ensure that individuals are aware that their data is being processed, and that they understand.

How the data is being used

How to exercise their rights

To this end, the company has a privacy statement, setting out how data relating to individuals is used by the company. This is available on request and available on the company’s website.

Review of this policy

We keep this Policy under regular review. This Privacy Statement was last updated in April 2018.